Transportation Funding: Highways, Roads, and Bridges Executive Summary
G l o s s a r y Surface Transportation Refers to highways, roads and streets, bridges, and public transportation.
Toll Credits Credits are earned when the state, a toll authority, or a private entity funds a capital transportation investment with toll revenues earned on existing toll facilities (excluding revenues needed for debt service, returns to investors, or the operation and maintenance of toll facilities). The amount of credit earned equals the amount of excess toll revenues spent on nonfederal highway capital improvement projects.
Transportation funding in Michigan faces a serious shortfall. From 2007 to 2008, state transportation appropriations in Michigan fell from $3.44 billion to $3.36 billion.1 This recent fall in appropriations may seem temporary or even relatively small, but it appears that Michigan is at the start of a longterm decline in transportation revenue. Moreover, state transportation infrastructure is in jeopardy because of the increased cost of road building and maintenance along with a fall in revenues from fuel-taxes.2 Compounding the problem of increasing costs and declining state revenue is Michigan’s inability to meet the revenue requirements to qualify for federal grants. The combined effects of declining state transportation revenues, uncertain federal contributions, and increasing costs threaten Michigan’s transportation infrastructure. Without an improvement in the Michigan economy and/or policy changes, a number of transportation programs will likely be cut or scaled back. This brief provides an outline of methods by which highways, roads, and bridges are financed in Michigan and a discussion of the advantages and disadvantages of various policy options for solving Michigan’s transportation funding shortfall.3 Because of its dominance in current policy discourse, particular attention is paid to the Transportation Funding Task Force’s analysis of Michigan’s transportation funding system.
Transit Refers to the public elements of transportation, as often communicated by the term ‘mass transit’. Commuter services like buses and rail are examples.
Trunkline A trunkline is defined as a road that normally goes by a general title but is made up, at least in part, of smaller roads with different names. A Michigan example would be M-60, a state highway, with segments named Spring Arbor Road, Homer Road, and so forth. The term is also used for railways and other kinds of connected lines.
Overview This brief focuses on the funding of highways, roads, and bridges, which comprise the majority of the state transportation budget.4 Insufficient state revenues are inhibiting the state’s highway system goals. In 1997, the State Transportation Commission established a performance goal for the state’s highway system aimed at bringing 85 to 95 percent of state roads and bridges to good condition within ten years. However, since 2008 the Michigan Department of Transportation (MDOT) has not had the revenue required to meet those performance goals while completing needed capacity improvement projects.5 Revenue is predicted to decline even further if Michigan is unable meet federal revenue requirements necessary for securing federal funding. In 2008 Michigan received $1.2 billion in federal transportation funding, about onethird of its total budget (see Figure 1). The current federal aid program, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Michigan Research Briefs: A Series on Key Policy Issues
Center for Local, State, and Urban Policy, Ford School of Public Policy, University of Michigan
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